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Title: On the persistence of output fluctuations in high technology sectors
Authors: Lasselle, Laurence
Aloi, Marta
McMillan, David G.
Keywords: Persistence
Endogenous fluctuations
Stochastic trends
Issue Date: 2000
Citation: School of Economics and Finance discussion paper series ; 0013
Abstract: Fatás (2000) argues that in a cross-section analysis of countries there exists a positive correlation between long-term growth rates and the persistence of output fluctuations. The current paper extends this line of research by examining manufacturing sectors of an economy which can be characterised by two levels of technology; a low level and a high level. Analysis of the data reveals a positive correlation between long-term growth rates and the persistence of output fluctuations in ‘high-tech’ sectors. This empirical analysis is further supported by reformulating the model of Matsuyama (1999b) in a stochastic environment. Within this framework the model is able to capture the two main theories of growth, namely; the Solow model and the Romer model. The stochastic nature of the long run output trend is endogenous and based on technological shocks. Despite the cyclical nature of the shocks we are able to show that output fluctuations are more persistent in ‘high-tech’ sectors.
Version: Postprint
Description: Previously in the University eprints HAIRST pilot service at
Type: Working or discussion paper
Publication Status: Not published
Status: Non peer reviewed
Publisher: School of Economics and Finance, University of St Andrews
Appears in Collections:Economics & Finance Research

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